New regulations to protect businesses and consumers from unfair trading and commercial practices came into force at the end of May.
The new Consumer Protection Regulations, which implement a Brussels directive, are designed to clamp down on unfair sales and marketing techniques. These new rules change or replace existing consumer laws, including parts of the Consumer Protection Act and most of the Trade Descriptions Act, and are aimed at simplifying and consolidating consumer protection law, both in the UK and throughout the EU. The old legislation, which specifically banned the use of false trade descriptions and misleading price indications, has been replaced by a general ban on treating consumers unfairly, and on aggressive commercial practices.
The Regulations are wide-ranging and are aimed at sellers who use the latest electronic sales techniques, as well as more traditional rogue traders, like unreliable builders and dishonest used-car salesmen. They aim to protect businesses which operate fairly, from unfair competition, and to protect consumers from aggressive selling and misleading information about products or services.
These rules will prevent producers from confusing customers into believing they are buying well-known brands by the use of a similar name or packaging, or a familiar shape or colour scheme. In future, misleading consumers in this way will be a criminal offence. Although the legislation is mainly intended for consumer protection, it may bring major benefits for businesses whose trademarks or designs are infringed. Up to now these businesses have had to rely on private civil actions, often based on the common law concept of passing-off, to try to protect their brands from unscrupulous imitation. Such claims are complex and expensive, and carry considerable costs risks if the claim is not successful. Under the new rules such practices will be illegal and may result in criminal prosecution.
There are some surprising pitfalls in the Regulations for businesses which sell children’s products. Advertising which is specifically targeted at children, including advertisements which encourage children to pressure their parents into buying the latest must-have products, will fall foul of the new rules. If you think this is the Nanny State gone mad, bear in mind that these rules will apply across the whole of the EU, not just the UK. In fact, until now the UK was one of the few EU member states not to have a general fair trading duty incorporated into its national law.
It is now illegal to promote a product by offering a fictitious prize – which is apparently not uncommon. Promotions which mislead consumers by telling them that nine out of ten named customers have won a prize (each reader assumes they were the unfortunate one out of ten who didn’t win) will be outlawed.
Traditional door-to-door salesmen will not be able to continue their sales pitch once they have been asked to leave. More aggressive modern sales techniques, like persistently phoning or emailing members of the public, may also be illegal.
The new law is aimed at protecting consumers, but it may also create a more level playing field for businesses who operate fairly, and who face unfair competition from less scrupulous traders who employ underhand selling practices. Businesses which ignore the new rules run the risk of criminal prosecution by local authority trading standards officers, who may soon be facing a sharp increase in their workloads. The penalties are steep – up to £5,000 in the magistrates’ court, or an unlimited fine or even imprisonment in the Crown Court.
Ralph Court is a partner and head of the commercial litigation unit at Raworths LLP. To contact Ralph, telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate HG1 1HF. Alternatively you can email Ralph - ralph.court@raworths.co.uk.
